Despite a 17% increase in server operating system environment shipments worldwide, revenue in that market will increase by just over 1% by 2004, according to a new study from International Data Corporation (IDC).
Lower-priced products -- notably the open-source Linux operating system environment -- are generally attributed by the market researcher for the discrepancy.
Even though it recently slipped past Novell's NetWare into the number two market position in terms of new licence shipments, Linux operating system software brought in just $US67 million last year, which is insignificant compared to Microsoft's revenue, noted Dan Kusnetzky, IDC vice president of system software.
"It's a disruptive technology," he said, referring to the open-access aspect of Linux whose source code is available free on the Internet.
"The cost of the (Linux) shipments going out the door are at a very, very low price compared to competitors. ...It is drastically less expensive, but it can't do some of the things other operating systems offer. But if [people's] needs fit within those boundaries, people will buy it."
Companies like Red Hat Software can get Linux for free on the Internet, add services to the operating system and sell it for a profit, Kusnetzky said.
Copies of the Linux software obtained freely off of the Internet were not included in the IDC study, making the prescribed rate of growth very conservative, he said.
Linux shipment growth is expected to increase more than any other server operating environment, according to IDC.
IDC forecasts the compound annual growth rate on Linux shipments will be more than 28%, from 1.3 million last year to 4.7 million in 2004.
Likewise, Linux revenue will grow the fastest in the market, rising more than 23%. Even so, revenues will be just over $85 million by 2004 and total Linux server shipments will be second to Microsoft's Windows line.
Microsoft Windows NT accounted for 38% of the 5.5 million licensed shipments of operating system environments in 1999. Linux had 24% of the market, NetWare accounted for 19% and Unix brought in another 15%.